COVID pandemic has shown the value of employee ownership

Living in the San Francisco Bay Area, I find it’s nearly impossible to go a day without worrying about our region’s everworsening economic inequality. And the COVID-19 pandemic has only made things worse.

According to the Public Policy Institute of California, 3 million jobs vanished from the state between February and May 2020. The consequences of this have been drastic — and unevenly distributed. In our region, data from the Bay Area Council Economic Institute suggests that workers in the bottom 10% of earners are faring far worse than those in the top 10%.

Small businesses are also struggling. At least half of small businesses reported “large negative” effects of the pandemic at the start of 2021, and the San Francisco Chamber of Commerce reports area small-business revenue is down by nearly 50% as of June.

Right now, we’re on track to see two very different types of economic recoveries. For many highwage workers, the recession has all but ended. But for lower-wage workers and small-business owners, significant hardship persists.

Those easily able to transition to remote work — like many of the tech workers in our area — have seen their fortunes stabilize, if not improve. But people whose industries require them to work in person (for example, hospitality, restaurant or manufacturing workers) have continued to struggle. And businesses themselves have struggled to retain their employees and attract new ones.

If you own a small business, you might be thinking you’re doing everything you can to support your employees and communities through these trying times. There’s one more tool that you can use to sustain and strengthen your business, empower workers and strengthen our community: employee ownership. Employee ownership, or EO, is a business model in which employees gain an equity stake in the business — giving them ownership in the place they work.

EO gives business owners a powerful tool to encourage hiring and retention, with data showing that employee owners remain at companies longer than their non-EO peers. Employee-owned businesses perform better across metrics including sales, employment and growth. And throughout the pandemic, employeeowned businesses have avoided many of the jobquality concerns that have kept people from rejoining the workforce. In fact, EO businesses often surpassed their non-EO peers across job retention, pay, benefits and safety.

Employee ownership can be an excellent way to turn the economic tides in our region by preserving businesses in local communities and creating quality jobs for workers. That’s why we have joined forces with three other nonprofits across the country to expand the employee ownership movement. Together, we provide small-business owners in the Bay Area and across the nation with guidance and tools to consider the EO model that best suits their business.

In San Francisco alone, small businesses account for more than 93% of total businesses, supporting over 364,000 jobs citywide. Nearly half of the private workforce in California — over 7 million people — is employed by a small business.

As the Bay Area seeks to rebuild our local economy from the devastation of the pandemic, it’s time to think about how we can transition to an economy with quality jobs for all. By embedding employee ownership into our small business recovery, we can ensure prosperity for countless workers and build strong communities for generations to come.